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The First District Association Board of Directors has approved the revolvement of old equity payable in June 2010. FDA has a proud tradition of consistently revolving member equity twice annually. The 2010 first half equity payment approved by your Board of Directors and payable to FDA members in June is $1.5 million. Upon approval from the FDA Board of Directors, a second 2010 equity payment will be made to FDA members December 11, 2010 at FDA’s Annual Meeting.

The USDA Class III price for May 2010 was announced at $13.38/cwt, up $3.54/cwt from May 2009. The average five and ten year Class III price for the month of May is $13.97/cwt and $13.85/cwt respectively. We understand that prices are below what they need to be and are hopeful that dairy markets will strengthen as we approach the traditional higher demand season.

Commodity markets for Cheddar Blocks and Barrels averaged $1.44/lb. and $1.42/lb., up 2-3 cents from April. The market peaked at $1.50/lb. on May 21 and has unfortunately experienced gradual weakness since. The Cheddar Block and Barrel market as of June 14, 2010 is $1.37/lb. and $1.33/lb. respectively. We are pleased that Whey Protein Concentrate and Lactose prices remain relatively healthy at this time providing some aid in the “all milk price” paid to producers.

According to dairy analyst, Jerry Dryer, “Uncertainties about a host of developments around the world are creating much uncertainty about the future of dairy prices. The Euro is in crisis mode and the U.S. dollar is very strong.” Concerns regarding E.U. Somatic Cell Count (SCC) requirements and current export issues with China are adding to uncertainties especially as it pertains to exports. Strong national milk production (up 1.7% in April) has resulted in robust cheese production and high inventories nationwide. Regardless, milk supply and cheese yields will likely continue declining as we approach the heat of summer. In addition, demand for cheese should increase with summer promotions, grilling, continued US economic growth and especially the upcoming higher demand time of year.

The National Milk Producers (NMPF) “Foundation for the Future” program received significant support from dairy leaders attending meetings in Washington DC June 7-9. The “Foundation for the Future” proposal eliminates dairy price supports and MILC payments by replacing them with a “Margin Insurance Program”. In addition, the “Foundation for the Future” includes Federal Order changes and a Government “Milk Production Management Program”. The FDA board of Directors will continue to remain engaged and clearly express any concerns and recommendations that impact upper Midwest Dairy Producers.

FDA produced over 12.0 million pounds of cheddar cheese during May. FDA Milk volumes, Cheese sales, Whey Protein sales and Lactose sales remain strong. In addition, finish product inventories are in good balance. We believe that FDA’s quality reputation is responsible for its ability to maintain strong sales.

FDA will be commissioning the new Whey Evaporator plant in early July after nearly one year of construction and two previous years of planning. We are looking forward to scheduling an open house in the summer of 2011 which will provide our members with an opportunity to tour the new facility along with celebrating FDA’s 90^th year anniversary.

June is National Dairy Month. No one works harder than our dedicated dairy farm families and we truly appreciate your efforts along with the high quality food you produce. We sincerely appreciate the commitment and loyalty from each of our valued member owners.

Hats off to dairy farmers! We hope for a good year to you and your family, God Bless!

FDA is trying to keep our members current regarding new milk Somatic Cell Count (SCC) requirements on milk received from our members. We have provided a number of articles over the past several months with the intent of keeping our members up to date regarding changes that were announced by USDA in January requiring farm SCC to be less than 400,000 on a three month rolling geometric average and for bacteria (SPC) to be less than 100,000 on a two month rolling geometric average. Needless to say, FDA is very proud of the excellent effort our members have taken to improve their SCC and bacteria levels in milk over the past several years. We are happy that FDA members who are able to achieve high quality standards also receive well deserved and substantial quality premiums exceeding that of most other processors.

FDA, as well as most (possibly all) processors are tied to global market standards. FDA currently markets dairy products to important and valuable customers requiring E.U. Certificates. New and recent information regarding future SCC and bacteria requirements for plants that process milk for global markets now stipulates that every producer will need to be in compliance with meeting the new standard that requires producers to be below 400,000 SCC and 100,000 bacteria on a three month and two month, respectively, rolling geometric average. For example, once producers three month rolling geometric average SCC exceeds 400,000, First District Association must legally notify the USDA/AMS immediately and within a three month period or less, the producer will be required to obtain a three month rolling geometric mean below 400,000 SCC. In the event the producers SCC falls below 400,000 prior to the end of the three month period, we currently believe the producer may be able to become re-qualified as EU compliant. The same program applies to bacteria exceeding 100,000 on a two month rolling geometric average.

First District Association is not pleased with the rules being mandated by USDA and the EU since it clearly jeopardizes the market for a producer’s milk that can’t be brought into compliance. It does not appear that segregation of non-compliant milk is feasible. It is FDA’s desire to work with all members regarding this situation to the best of our ability. FDA currently “trades” milk with other processors who will also require all producer milk to be EU compliant which further complicates the issue. FDA will continue to do its best to keep members informed of any new (and hopefully better) information. Dairy producers and their processor will be required to be compliant with the previous three month rolling geometric average SCC less than 400,000 and two month geometric mean SPC below 100,000 by October 1, 2010. We strongly encourage all dairy producers to take the necessary action required to comply with the new requirements as soon as possible. On a positive note, we will undoubtedly see FDA members receiving more income from the lower SCC milk.

Please feel free to contact your Field Service Representative, FDA Quality Department, or Clint Fall regarding any questions or concerns.

First District Association has achieved a milestone in that we have not had a lost time injury by an FDA employee in over 18 months. This has in large part been the result of all employees taking safety very seriously and working together. The benefit of FDA’s “Safety First” policy is numerous including high employee morale and productivity, reduced Workmen’s Compensation Insurance and overtime costs.

This achievement speaks clearly of each individual employee recognizing and taking responsibility for their personal safety and helping insure a safe work environment. The real goal is that every employee goes home safe to their families after every work day.

Summer is upon us. We would like to take this opportunity to remind all producers of the need for annual maintenance of your bulk tank compressors. We understand that producers can’t afford to lose income over unfortunate circumstances. The following are some points to consider for efficient cooling on you dairy operation.

1. Clean condensing unit to ensure good outside air flow. Be sure vent is clear of dust and open fully during hot weather months.

2. Vent should be dusted to pull in outside fresh air, rather than recirculating hot air from inside the milk room or utility room depending on location of the compressor. It will run less and more efficient if proper air flow is obtained.

3. Have the system checked annually for Freon levels, a low system will operate but not cool efficiently causing it to run longer than necessary.

4. Check the tank for shut down temperature; 36 to 38 degrees is recommended for good storage. This also enhances blend temps upon 2^nd, 3^rd and fourth milking coming in. Blends should not exceed 50 degrees to maintain good quality and low bacteria counts.

5. Have a system in place to alert you or hired help when the tank needs to be turned on. Too often it is forgotten until the next milking and then it is too late. DO NOT attempt to add fresh milk to already stressed milk even if you turn on the tank. Call your fieldman, he can make arrangements to have it tested for bacteria and then if it is still usable have it picked up.

6. Plate coolers are huge asset to cooling milk quickly. If you do not have one, this would be greatly recommended. If installed with a good outlet for the water it can lower milk temps by as much as 45 to 50 degrees from the cow, and before it reaches the tank, thus allowing for the tank cooler to run less. The best place to plumb the water is to a stock tank for the cattle to drink. The water is warm and cows like to drink it warm rather than cool and therefore drink more increasing her production.

FDA is very proud of our young progressive dairy farmers and the young cooperator (YC) program. If you are an FDA member and you or your spouse is less than 45 years old, please consider filling out a young cooperator of the year application.

The FDA young cooperator of the year will be announced at the First District Association YC banquet. This year’s banquet will be Saturday, September 25, at Greenwald Pub in Greenwald. In addition, the YC’er of the year may attend the National Milk Producer Federation annual conference. This year the NMPF conference will be held at the Grand Sierra Resort in Reno, Nevada, October 26-28, 2010. Be sure to check future newsletters for more details regarding the application deadline. If you have any further questions regarding the application, please contact FDA Field Service Representative, Chad Thorsten, at 320-221-3739.

First District Association will forward contract milk based on Class III futures for FDA members and customers who desire to lock in base values for milk. First District Association also provides a valuable option for interested and qualified members to “Average Price” a portion of their deliveries. This process allows for a smooth cash flow with level prices. Market information can be obtained by accessing the FDA Internet web page at www.firstdistrict.com, calling our voice mail system toll-free at 1-866-593-4235 or locally dial 593-4235, phoning Blimling and Associates at 1-800-726-9928, or contact Glenn Kaping at (320) 593-4239.

Month	May 14	May 28	June 11
May	13.03	13.05
June	13.58	13.30	13.25
July	14.23	13.20	13.18
August	14.76	13.70	13.65
September	14.89	14.19	14.26
October	14.76	14.27	14.42
November	14.68	14.25	14.45
December	14.63	14.31	14.30
January	14.50	14.28	14.25
February	14.50	14.30	14.21
March	14.50	14.40	14.10
April	14.33	14.31	14.05
May			14.13
Average	14.37	13.96	14.02